Synopsis:

Credit Agricole analyzes the recent fluctuations in the USD, noting its broad weakening against G10 FX peers last week. The bank anticipates potential relief for the USD during the upcoming Thanksgiving week, a period historically favorable for the currency.

Key Points:

• Recent USD Weakness: Despite a tentative bounce back in US rates across the curve, the USD weakened broadly against its G10 FX counterparts last week, signaling a possible underlying weakness.
• Subdued Domestic Newsflow: The Thanksgiving holiday is expected to result in limited domestic news, including a reduction in interventions from Fed members.
• November FOMC Minutes: The release of the FOMC minutes might appear outdated, especially in light of recent US jobs reports and CPI data indicating weaker-than-expected outcomes.
• Historical Thanksgiving Trend: Historically, the USD has shown resilience in the run-up to Thanksgiving, although it tends to weaken slightly in the days following the holiday.
• Focus on Black Friday Sales: Investors are likely to closely monitor Black Friday sales outcomes as an indicator of the US economy's response to the Fed’s rate hikes, with particular attention to the resilience of the US consumer.

Conclusion:

Credit Agricole suggests that the upcoming Thanksgiving week might offer some respite for the USD, based on historical trends and the subdued nature of the week’s economic newsflow. The focus will be on how the currency performs in the context of recent economic data and the anticipated consumer response during Black Friday, which is seen as a barometer for the economy's strength amid ongoing rate hikes.